What is the purpose of statutory stock compensation plans?

The purpose of statutory stock compensation plans primarily revolves around qualifying for specific tax advantages under the Internal Revenue Code. These plans, such as Incentive Stock Options (ISOs) and Qualified Employee Stock Purchase Plans (ESPPs), are designed to offer favorable tax treatment that aligns with their regulations.

When certain conditions are met, employees can benefit from the ability to defer taxation until they sell the stocks obtained through these plans, and they may also qualify for long-term capital gains tax rates rather than ordinary income tax rates upon sale. This structure incentivizes employees by aligning their interests with those of the company, as they can profit from stock appreciation while enjoying a lower tax burden, which is a clear advantage under the tax code.

While the other options relate to various duties or provisions associated with stock compensation plans, they do not encompass the primary focus of statutory plans, which is to leverage specific tax qualifications to benefit both the employer and employee.